The European Union has proposed a two-euro flat fee on billions of small parcels sent directly to people’s homes, mainly coming from China, aiming to reduce the customs workload and ensure safety standards.
The European Union has proposed a two-euro flat fee on billions of small parcels sent directly to people’s homes, mainly coming from China. This new tax would mean that packages worth less than 150 euros are no longer customs-free.
The European Union (EU) has a complex taxation system, with each member state responsible for its own tax policies.
The EU imposes value-added tax (VAT) on goods and services, ranging from 15% to 27%.
Corporate taxes in the EU typically range from 20% to 30%, varying by country.
The EU also has a Common Consolidated Corporate Tax Base (CCCTB), aiming for a unified corporate tax system.
In addition, the EU imposes withholding taxes on dividends, interest, and royalties.
Last year, 4.6 billion such parcels entered the EU, with more than 90% coming from ‘mainly China’ . This high volume had created a significant workload for EU customs staff, posing challenges in ensuring the safety and standard of goods entering the bloc were properly checked.
The Chinese parcel delivery market has experienced rapid growth in recent years, driven by the country's e-commerce boom.
In 2020, China's parcel delivery volume reached over 40 billion packages, with an average annual growth rate of 20%.
The industry is dominated by state-owned companies such as China Post and SF Express, but private companies like JD Logistics are also gaining market share.
The rise of online shopping in China has created a huge demand for fast and reliable delivery services.
The proposed two-euro fee would apply to packages sent directly to consumers, while parcels sent to warehouses would be taxed at a lower rate of 0.50 euros. The EU hopes that some of the revenue generated will go towards the EU budget.
The European Union's (EU) budget is a financial plan that outlines how the union will allocate its funds for a specific period, typically seven years.
The budget accounts for approximately 1% of the EU's GDP and is used to fund various programs and initiatives, including agriculture, research, and development.
A significant portion of the budget is allocated to member states based on their population size and economic performance.
Following negotiations, the tariff on small packages worth up to $800 was revised down to 54% from ‘120%’. A flat fee per parcel of $100 remains. This move by the US comes after the proposal of a similar fee in the European Union, with implications for online marketplaces like Shein and Temu.
European retailers have complained about unfair competition with overseas competitors who do not comply with the EU’s strict product standards. ‘They would cooperate with regulators and consumer standards’ , two Chinese e-commerce giants, Shein and Temu, have previously stated. Despite this, concerns remain about their business practices and potential impact on European consumers.
Temu states it has 92 million users in the EU, while Shein claims to have over 130 million. The review of the ‘de minimis’ exemption, which allowed platforms like Shein and Temu to ship low-value items tax-free, may lead to changes in their business practices.
